Passenger-vehicle deliveries in the world’s largest auto market, China, have surged at the slowest rate since 2012 after the first nine months, showcasing the slumping demand that triggered a governmental purchase tax cut to rekindle demand.
Retail sales of cars, SUVs and multipurpose vehicles soared 5.8 percent to a tally of 14.4 million vehicles during the January through September period, announced the China Passenger Car Association, the lowest increase rate during the past three years. Following a negative performance both in June and July, the sales regained some pace and expanded 2.5 percent in September. At the end of last month the authorities initiated a stimulus program that included the reduction in half of the purchase tax for around 64 percent of passenger cars, following increased lobby from the state-backed auto association that cited weak economic growth concerns. “We will see major sales growth in the October numbers as the impact of tax cut kicks in,” comments Yale Zhang, a managing director at Autoforesight Shanghai Co. “Car buyers are recovering from a stock rout psychologically and starting to buy if they do need a car.”
The government reduced by 50 percent the purchase tax on autos using engines 1.6 liters or smaller to 5 percent starting October 1, with the derogation set to be active through the end of 2016. The strategy also included a ban on local governments seeking to restrict the buying and operation of electric vehicles and restated its support towards new energy vehicles – electrics and plug in hybrids – as well as battery and charging infrastructure development.